RBI further lowers ceiling on free ATM transactions

Using ATMs to withdraw cash may soon become an expensive proposition specially for the 'aam admi', as the Reserve Bank of India – perhaps bowing to pressure from commercial banks – has reduced free usage of other banks' ATMs to three transactions per month from five earlier, even as the number of automated teller machines has grown exponentially.

Moreover, the RBI on Thursday also allowed banks to levy ATM charges for more than five transactions even by their own account-holders.

The reduction of the transaction limit will, however, not be applicable to customers having basic or small savings bank accounts as well as for ATMs located outside the major cities of Mumbai, New Delhi, Chennai, Kolkata, Bangalore and Hyderabad.

The central bank's definition of 'transactions' goes beyond mere cash withdrawals to include balance enquiries, placing a cheque book request, or recharging a mobile phone.

"Taking into account the scope for cross-subsidisation and with a view to ensuring more transparency in the pricing of these transactions, banks have been advised to provide their savings bank account holders with at least five free transactions per month at their own ATMs.

''Beyond this, banks may decide to levy transaction charges (not exceeding Rs20 plus applicable taxes per transaction) which are decided in a transparent manner," the regulator said in a circular meant to "rationalise the number of free transactions".

This came with an advisory that the number of free transactions on ATMs set up by other banks had been reduced to three, from five earlier, in Mumbai, New Delhi, Chennai, Kolkata, Bengaluru and Hyderabad.